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Memphis Tennessee Bankruptcy Blog

What is a hardship discharge?

When you file for Chapter 13 bankruptcy in Tennessee, you must agree to a repayment plan. This plan outlines how much you will pay back each creditor you have. It is your obligation to repay your debts and stick to the plan as part of your bankruptcy agreement. If you complete the plan, the court clears any remaining debt, and you get a fresh start. However, sometimes things do not go the way you want. If you end up unable to fulfill your obligations, the U.S. Courts explain you could file for a hardship discharge.

This is an early discharge of your bankruptcy due to a financial hardship that makes you unable to continue following and paying under your plan. It is not easy to get and is not available to just anyone. You have to have solid proof that you are suffering a hardship that makes it impossible to repay your loan. The court must also validate that modification of your plan would not help the situation. Additionally, you have to have paid at least as much as your creditors would have received if you filed Chapter 7.

Fight back against fear by filing for bankruptcy

Creditors in Tennessee can resort to bullying tactics in trying to collect on a debt that you owe once you fall behind on your bills. We at Jimmy E. McElroy & Associates understand the fear that clenches in your stomach when you hear the phone ring and know that it is another debt collector calling to harass you, as well as the paralyzing anxiety that prevents you from going to the mailbox only to find more letters and notices demanding that you pay money that you do not have. 

Filing for bankruptcy can help you to alleviate these fears, enabling to go to your mailbox and answer your phone with confidence once again. The longer you go without paying bills, the more persistent the harassment can become. In addition to threatening letters and phone calls at all hours, creditors may contact your employer or family members and even come directly to your house. However, once you file for bankruptcy, it is illegal for creditors to engage in these activities or to continue debt collection attempts at all. 

When is Chapter 7 a better choice than Chapter 13?

If you decide that filing bankruptcy in Tennessee is the only option to your personal financial troubles, then you will next have to decide which type of bankruptcy to file. Your options are Chapter 7 and Chapter 13. Each offers distinct advantages and disadvantages, so you have to think about your personal situation when making the choice.

Looking at Chapter 7, Credit Karma explains that you will only have this option if you can meet the income limits. Essentially, you need to have little disposable income which you can use to repay your debts. So, if your financial struggles are due to a lack of income, this may be the best option. However, you may also lose more of your assets with Chapter 7 because the court will seize any non-exempt assets. Also, if you have a home or a vehicle you have a loan on, you will probably lose them as well. So, this type of bankruptcy is best if you have few assets and rent your home or own your home and a modest vehicle. Finally, Chapter 7 is much faster than Chapter 13, so if you want things resolved fats, this is the best choice.

Ways to make a good case for yourself to lenders

Declaring bankruptcy is not the end of the world. Although it is a common fear among many people that financial lenders will now look at them as major financial risks as a result of bankruptcy, the fact that you have gone bankrupt will not shut the doors of every financial lender to you. You still have ways that you can present a good case for yourself at your local Tennessee bank or lender.

Smartasset explains that your lender is probably going to inquire about your bankruptcy. Naturally, a lender may wonder why you had to declare bankruptcy in the first place. Even if the subject is uncomfortable, you should still prepare to explain the circumstances of your bankruptcy as best you can. You can also expect some questions about how you have handled debt since your bankruptcy.

Chapter 13 bankruptcy and automatic stays

Deciding to file for bankruptcy is not always an easy choice. Many Americans become buried beneath medical expenses, mortgages, credit card debt and other bills and run to bankruptcy as a way to find freedom from their financial stress. Part of this stress may stem from harassing creditor calls, who in some cases, threaten people with wage garnishments, lawsuits and repossession of property if debtors fail to make payments. Once people file their Chapter 13 paperwork, however, it can release them from creditors’ attempts to collect past due debt while the bankruptcy is being processed.

An automatic stay is issued when people file for bankruptcy, making it illegal for creditors to contact people for any reason involving debt. When filling out Chapter 13 paperwork, the filer must submit a list of all creditors involved in the bankruptcy. Officials will send out a notice of bankruptcy to these creditors, who are then unable to contact you in an attempt to get late payments. During this time, creditors are unable to make telephone calls, send emails or texts, begin or continue lawsuits, garnish wages or make threats.

Important tax tips for bankruptcy filers

As someone who is currently navigating your way through a Tennessee bankruptcy case, you are probably trying to find out as much as possible about how your filing will affect your life, and how it will help you regain control of your finances. It is also important, however, that you determine how filing for bankruptcy will impact your taxes. At McElroy & Associates, we recognize that filing for bankruptcy will affect how you file your taxes, and we have helped many clients facing this and related issues find solutions that meet their needs.

Per TurboTax, one of the first things you should do after filing for bankruptcy is avoid taking on any new debt. Why? The rules associated with filing for bankruptcy dictate that you may not accrue any new delinquent balances while your finances are under the bankruptcy court’s supervision. If you do, this can lead to a dismissal of your entire bankruptcy case.

Has that pile of medical bills become too overwhelming?

Along with the cost of high-deductible insurance plans, mounting medical bills are a considerable worry for families with an average income. An accumulation of medical bills is certainly not the only reason people consider filing for bankruptcy protection, but healthcare-related debts prompt hundreds of thousands to seek relief.

Affecting people of all ages

How can I work with creditors to avoid bankruptcy?

If you are having trouble paying your debts in Tennessee and have falling behind in payments, your creditors will aggressively approach you to try to get you to pay. At this point, you may be thinking of filing bankruptcy, but you may have another option. You can try to negotiate a settlement with your creditors.

According to the Consumer Financial Protection Bureau, you need to gather some information before you go into negotiations. You should make sure you have a repayment plan set up. Know how much you can afford to pay and when you can pay it. You should also be realistic. Make sure you can stick to any agreement you make.

Press pause on foreclosure by filing for bankruptcy

People in Tennessee often hold off filing for bankruptcy on the basis of a mistaken idea that doing so causes you to lose everything you own. We at Jimmy McElroy & Associates assure you that not only is this not true, but filing for bankruptcy can actually allow you to keep your home by pausing the foreclosure process.

Even if the timer is ticking down to the moment of foreclosure, filing for bankruptcy can stop the clock, and if the foreclosure has already happened, it may not be too late to reverse it by filing for bankruptcy.

*We are a debt relief agency.
We help people file for bankruptcy relief under the Bankruptcy Code.